Blue Ocean Strategy in ITAB Company

Identification of the Company's Relative Performance in the Industry 

Competition in the twenty-first century has become part of the business activities in the various sectors. The competition has affected multiple companies in different ways. For instance, the competition surrounding the activities of ITAB has necessitated the diversification of the company's products and services, which the company has for a long time used in the competitive advantage approach. Technology has also influenced the recent business ventures by stiffening the level of competition and taking it to another entirely new level. ITAB has had to make use of technology to boost its competitive advantages (Laszlo & Zhexembayeva, 2017). For instance, the marketing activities and the delivery have been founded on technology and therefore placing the company in a good position in its market. The factors such as competition and the advancement of technology will make it necessary for ITAB into the adoption of the blue ocean strategy. Two company performance parameters could be considered in the case of a particular market. One of them is the red ocean strategy. In the red ocean strategy, companies are often involved in the rivalry, which makes them be in a rush to defeat the other companies in the various parameters. The blue ocean strategy, on the other hand, is involved in the creation of demand for a product or service, and the utilization of the opportunities that come along to improve the firm's performance in the market (Laszlo & Zhexembayeva, 2017). The blue ocean strategy would be the most appropriate for ITAB in this case since the company is a continental leader in the products and services provided in Europe. The company is also a modern firm with able leaders, and therefore the introduction of the blue ocean strategy to the company would bring about the development that is required concerning finances as well a social development (Laszlo & Zhexembayeva, 2017). The company's high performance in its industry in both Sweden and the rest of the world would place the company in a position to efficiently integrate the blue ocean strategy to maintain rapid development. 

The blue ocean strategy is capable of influencing the relative performance of ITAB in the market. Through the integration of the blue ocean strategy, ITAB would find an uncontested market space. The uncontested market space would be helpful to the company concerning advancing the marketing goals that the company has set. The management is supposed to come up with objectives that amount to reaching out to the potential but untapped markets. The blue ocean strategy focuses on creating and maximizing the opportunities in a company that lead to efficiency in the production and delivery of goods and services that emanate from the burgeoning customer base (Laszlo & Zhexembayeva, 2017). Laszlo & Zhexembayeva (2017) also associate the integration of the blue ocean strategies to the creation and realization of global sustainability in a company that seeks to achieve a multinational status. Through the blue ocean strategy, ITAB would have the ability to provide a more detailed approach to tackling the daily problems that affect the company and disrupt its usual financial performance trend. Alghamdi (2016) describes a study based on the Saudi Telecom Company (STC). The author focuses on the role of the market knowledge in the integration of the blue ocean strategy by the contemporary businesses. The case study advocates for the understanding of the market among the management as well as the employees. Alghamdi (2016) connect the knowledge in the market to the effectiveness of the blue ocean strategy in that the experience helps in the development of a competitive advantage in the company. After the issuance of questionnaires to the Saudi Arabian organizations, the researchers came up with the following conclusions that could apply to the case of ITAB. Firstly, the participants of the study had the necessary knowledge in the market growth dimensions. The adoption of the dimension increased their expertise in their respective markets and thus made it easy for them to adopt the blue ocean strategy (Alghamdi, 2016). Secondly, the participant indicated a relationship between the blue ocean strategy and competitive advantage in that the blue ocean strategy advances the competitive position of a company. 

In as much as blue ocean strategy is linked to the competitive advantage of an organization, many strategic managers are confused in its integration and end up adopting the competitive approach. Burke, van Stel, & Thurik (2016) contrast the blue ocean strategy and the competitive strategy. Both the competitive and the blue ocean strategic are strategic management measures to increase the growth of a company's profits and other financial performance metrics. However, Burke, van Stel, & Thurik (2016) explore the two functions separately to look into the outcomes of their processes to organizational development. Looking at the blue ocean strategy, Burke, van Stel, & Thurik (2016) explain that the plan ends up with the creation of new retail market space for a company while the competitive strategy ends up advancing the company's existing systems and processes in a bid to maximize profitability. Therefore, the authors suggest that the blue ocean strategy creates more corporate development compared to the competitive strategy. ITAB has had a history of the integration the competitive strategy. The company recorded lower performance with the competitive strategy in the past related to the ambitions of the company. Moreover, the adoption of the blue ocean strategy is set to have more advantages regarding the creation of a new market space by ITAB (Laszlo & Zhexembayeva, 2017). Notably, companies have made use of the blue ocean strategy to expand their production coverage. The creation of the new retail space has led to the continuous incremental effect of the financial performance of the companies with their revenues and profits recording a constant increase. The blue ocean strategy will, therefore, place ITAB in a better place to compete with the other companies in its industry in Sweden and the rest of Europe. The creation of the new retail spaces has led to the expansion of the company's production in the market, bringing its products and services closer to the target market, and thus contributing to its competitive advantage regarding the advancement of the market. With the introduction of the blue ocean strategy, ITAB will expect to have more growth in its financial and competitive sectors. 

To expand ITAB and enable it to reach the unexplored market regions for its products and goods, the company has had to spend a lot of its money on marketing. The state of the art marketing has taken a new approach in which it makes us if the blue ocean strategy with the help of the market knowledge among the strategic managers of ITAB. Abdi, Givi, & Hamidi (2015) have provided an analysis of the role of the blue ocean strategy in the marketing of the Iranian banks, which could be applied to the marketing operations at ITAB in its industry. The research performed took a correlational direction in which the researchers attempted to find out the factors of the blue ocean strategy that was helpful to the marketing of the products and services of the banks. The researchers used the questionnaires to come up with the dimensions that regard marketing of the banking system. However, the scholars had a general approach to the dimension of marketing, as they would apply to the other companies in different industries and countries. The first dimension was the idea of making competition meaningless by having a unique market space. The existence of an unrivaled market space pointed to the creation and the expansion of the new market spaces as the existing ones have severely been affected by the increase in competition among the various companies. The other dimension is the breaking of the relationship between the cost and the value of the products and services at the banks. The standardization of the value and the price of the products and services is a contemporary approach. The dimensions of marketing can be useful to the case of ITAB in the reduction of the costs used in marketing the products and services of the company in the market. 

Redesigning the Company's Value Curve 

Value Curve 

To transition ITAB from the red oceans to the blue oceans and expands its operations, the company needs to reconsider the value curve. Through the redefinition of the value curve, the company might benefit in the following ways. The redesigning enables a company to rapidly identify areas where its strategy and those of its competitors converge. Therefore, a company such as ITAB, in the redesigning of the company's curve, will have the ability to approach competition in its industry in a strategic manner that increases the possibility of the growth of the firm (Johnson, Christensen & Kagermann, 2018). Secondly, the redesigning of the value curve shows areas of divergence, where a company's strategy differs significantly from that of its competitors. The value curve, when changed to the better, will put ITAB in a position to evaluate its performance compared to it (Johnson, Christensen & Kagermann, 2018). Thirdly, the redesigning of the company's value curve helps the firm to identify the opportunities for innovation and competitive differentiation such as by increasing the demand for its products and services. 

The blue ocean strategy comes up with a model of value innovation for the present day companies as opposed to the red ocean strategy that discourages innovation by prioritizing competition. Value innovation lays emphasis on adding value with innovation rather than just value creation with improvements. Value innovation occurs when companies align innovation with utility, price and cost positions. Therefore, ITAB would benefit from value innovation and especially with the integration of the blue ocean strategy regarding its market expansion and the growth of the customer base. The redesigning of the value curve works in line with various principles. The first one is the reconstruction of market boundaries. With the red ocean strategy, the market boundaries of the industrial players are defined and the competition for the available customers. The other principle is focusing on the big picture. The blue ocean strategy places the modern businesses at the forefront of strategic improvement of the company parameters such as markets and financial performance. The other principle is reaching beyond current demand. The redesigning of the value curve of the companies under the blue ocean strategy enables a business to create new opportunities for the demand for its products and services in the existing as well as the new markets. The other principle is the establishment of the right strategic sequence. By redesigning the company's value curve, a company's management enjoys the privilege of having enough knowledge to execute leadership roles. The redesigning of a company's value curve is also guided by the principle of overcoming organizational hurdles. With the adoption of the blue ocean strategy to redesign ITAB's value curve, the company will have the ability to turn its possible threats into opportunities. The last principle guiding the redesigning of the company's value curve is building execution into strategy. After the leaders of ITAB are equipped with knowledge of execution within the firm, the redesigned value curve goes ahead to necessitate them to strategize on the execution to turn it into reality. For instance, the redesigned value curve would help ITAB implement the customer retention strategies that the management has come up with at a particular period. A close and detailed analysis of the existing product and customers are the key to this strategy development. 

The redesigning of the value curve of a company leads to the development of a utility curve of one's products against those of competitors helps a company bring out the strengths and weaknesses of its own. The distinction between the red ocean strategy and the blue ocean strategy in the evaluation of competition is that the former has competition that is stiff and most of the companies have similar products or services. A Blue Ocean Strategy raises the first question on the value curves as whether a business deserves to be a winner. When a company's value curve or its competitors meet the three criteria that denote an excellent blue ocean strategy, that is focus, diversity, and a compelling tagline that speaks to the market, the company is on the right financial track. These three criteria are an initial test of the economic viability of blue ocean concept. A focused company will undoubtedly have the ability to meet its specific customer requirements and identify its strongholds as well as the areas that it needs to improve. A different company has a comprehensive focus on the market and the production of goods. As such, the company will gain more money and win the trust of more customers. A compelling tagline for a company will increase the customer base of a company, which will, in turn, increase profitability. 

On the other hand, when an organization's value curve is not focused, the company's cost structure will sharply rise and its business model complex in implementation and execution. When it lacks divergence, a company's strategy has no reason to stand apart in the marketplace (Chan & Mauborgne, 2005). When the venture lacks an appealing tagline that communicates to potential buyers, it is likely to be internally driven by innovation, which may not generate the traffic of consumers that the company needs to sell its goods and services. Soon, the company lacks commercial potential. When a business' value curve comes into contact with that of its competitors, it means that the company will be caught within the red ocean of uncontrolled competition. The uncontrolled competition leads to the loss of coherence in the strategy that the venture uses to boost its financial growth by growing the market. An Incoherent Strategy is when a company's value curve zigzags. It signals that the company does not have a coherent strategy. Its strategy is likely based on independent sub-strategies. The sub-strategies may make sense up to some point and keep the business running, but on the overall, they do little to distinguish the company from the best competitor. The sub-strategies also fail to provide a clear strategic vision for the company in question. This is often a reflection of an organization with divisional or functional silos. The incoherence in the strategy may cost a company a substantial amount of money in the redesigning of the value curve to suit the specific company's goals such as in financial performance. 

Strategy Canvas 

The value curve is the primary element of the strategy canvas. It is a graphical indication of a company's relative performance across its industry's factors of competition. The strategy canvas is a primary diagnostic tool and an action framework in the contemporary business venture for getting clear on the current state of play and making your blue ocean move (Agnihotri, 2016). It graphically captures, in a straightforward picture, the current strategic landscape, and the future prospects for an organization. The following is an illustration of the canvas. 

The horizontal axis on the strategy canvas shows the range of factors that industry competes on and invests. The vertical axis captures the offering level that buyers receive across all of these critical competing factors. From the canvas, it is clear that the blue ocean strategic move has a positive effect on the competing factors by enabling the companies in a given sector to advance in their fields and increase the offering of their services. The industry value curve has mainly been based on the red ocean strategy where the players have a reduced offering level as the competing factors advance or increase in number. The strategy canvas serves two purposes. The first one is to document the present state of the known market space. The capturing of the current market conditions allows firms to clearly see the factors that the industry competes on and where the competition currently invests. The other one is to propel the industrial players to action by reorienting their focus from competitors to alternatives in the market and from customers to noncustomers of the industry to attract them (Agnihotri, 2016). The strategy canvas in the blue ocean strategy has its pitfalls too. The primary issue found in the canvas is the strategic contradictions. Strategic Contradictions are fields where a venture is offering a high level on one competing factor while ignoring others that support that factor (Chan & Mauborgne, 2005). To set a company on a robust and profitable growth and development trajectory in the face of the industry situations, it will not work to benchmark competitors and try to outdo them by offering a little more for consumers for less. Such a plan may skyrocket sales but will barely drive the firm to open up uncontested market space. The business venture will also have trouble performing extensive customer research the path to blue oceans. Our study found that customers could scarcely imagine how to create uncontested market space. Their insight also tends toward the familiar offering more for less. What consumers would typically want more of are those product and service features that the industry currently offers. 

Recommended Strategic Changes 

ITAB needs to have strategic changes that are fundamental to the effective integration of the blue ocean strategy to boost production and marketing at the company. The strategic management at ITAB needs to start by recognizing the correct use of the blue ocean strategy as a tool. The administration is also supposed to ensure that the blue ocean strategy is used in addition to the other tools in the company such as the marketing programs and production plans. The uses of the blue ocean framework as a tool, in this case, will be as follows. The strategic managers of ITAB will ensure that the blue ocean strategy is used to comprehend and evaluate the present situation in the marketplace. The understanding of the current situation in the market is inherent in the consideration of the factors that are necessary for investment and favorable competition in the market. The strategic managers at ITAB are also supposed to use the blue ocean strategy to initiate action by emphasizing on the alternative production and marketing opportunities that the company has rather than its competitors. The managers will also find the procedure useful in the tapping of the potential market and attracting the customers who used to be noncustomers of the company. With the consideration of the four actions framework of the blue ocean strategy, the strategic managers will give the ability to create new industrial factors that generate the value for ITAB's consumer base, reduce the redundant elements that cost the company a lot and in turn bring in little or no earnings for the company. The strategic managers will also eliminate the long overdue factors of competition among the industry players, and raise the industry factors that would ensure that the competitive advantages of the company help ITAB realize its goals in financial performance. 

The other strategic measure in the implementation of the blue ocean strategy action plan is the reconstruction of the market boundaries. The blue ocean strategy leads to the elimination of the industrial borders that contribute to a large portion of the intra-industrial competition. The blue ocean strategy may lead to the under-prioritization of competition, which is a significant factor in the determination of a company in the industry. The reconstruction of the market boundaries is made possible by the consideration of the customer as a significant factor that influences the financial performance of a company. The reconsideration of the customer has advantages to a company such as in the expansion of the already existing value chains and the entrance and satisfaction of new markets. ITAB, using the blue ocean strategy, will be striving to create and develop new sources of its revenue. The increase in the knowledge in the market, made possible by the blue ocean strategy, for the strategic managers is one of the tools that can be used to better the value chain of a company such as ITAB. The integration of the blue ocean strategy is also focused on the optimization of the processes in the production as well as the other aspects of the company, which leads to the increase in the efficiency of producing and offering goods and services to the target market. The production efficiency leads to the improvement of the quality of the products and services that are manufactured and distributed by ITAB to the Swedish clients and those from the other parts of the world. Therefore, the reconstruction of the market boundaries will be a strategic decision that will enable ITAB to focus on facelifting the quality of its products and services and the production of new goods and services for the market at large. 

The other strategic recommendation for ITAB to effectively integrate the blue ocean strategy is to reach beyond the existing demand. The company has many options that it could choose from to enable it to go beyond the current level of demand for its products and services at the market. One of the options is the production of innovative new products and services. The new services are set to contribute positively to the customer retention plans that the company has put in place. Summatively, the production of new items will attract new customer thus expanding the company's presence and expansiveness. The other option is to increase the quality of the already existing products and services. For instance, the company may focus on the existing lighting options to include more technological approaches such as automation that can be applied to lighting. That would increase the number of customers all over the world that solely depends on the lighting options that are designed and manufactured by ITAB. The increase in the quality of the products and services offered by ITAB is also essential to the creation and the sustainability of the level of competition that will favor the company and increase its sales in the market. The other option that ITAB might consider in its quest to reach beyond the existing demand is the intensification of the marketing plans in the company. The strategic management at ITAB should take advantage of the latest forms of technology in the world to increase the marketing operations of the company. The company's incremental growth in economic performance is an indicator of the company's stability in the market. The stability can be more enhanced by ensuring that the marketing operations in the company point towards increasing the sales that the company makes and the growth of the customer base due to the attraction of the consumers from the different parts of the world. 

Conclusively, the blue ocean strategy in the case of ITAB will be a source of more financial gain for the company that is on a commendable track towards economic victory (Yip & Hult, 2003). The blue ocean strategy has been found to be one of the underlying factors that influence the knowledge of the market. The experience of the market has been found to be very beneficial to the strategic managers in the various companies across the multiple industries that involve telecommunication and banking (Yip & Hult, 2003). The benefits can also be realized in the case of ITAB. The knowledge of the market has also helped the strategic managers to cut the costs that are involved in the production, marketing, and the delivery of the goods and services that are beneficial to the customers of the company (Yip & Hult, 2003). The blue ocean strategy has also been found to be particularly useful in the execution of the marketing operations of a company. With the adoption of the blue ocean strategy, ITAB is expected to gain more revenues from the sales made in the subsequent years of the company's operations. The blue ocean strategy has also been found to be useful in the stimulation of the growth of the demand in the various products and services. That has been evident in the creation of more opportunities in the production of goods and services by creating the new retailer sales. Hence, ITAB has to consider the effective implementation of the blue ocean strategy to increase development. 

References 

Abdi, F., Givi, M., & Hamidi, K. (2015). Effect of Blue Ocean Strategy on the Marketing 

Function of Iranian Banks (Case Study: Mellat Bank). Advanced Social Humanities and Management , 2 (3), 126-130. 

Agnihotri, A. (2016). Extending boundaries of blue ocean strategy. Journal of Strategic 

Marketing , 24 (6), 519-528. 

Alghamdi, A. A. (2016). The Role of Market Knowledge in the Adoption of the Blue Ocean 

Strategy and its Impact on Achieving Competitive Advantage: A Study Conducted in the Saudi Telecom Company (STC). Journal of Marketing and HR , 2 (1), 55-84. 

Burke, A., van Stel, A., & Thurik, R. (2016). Testing the Validity of Blue Ocean Strategy Versus 

Competitive Strategy: An Analysis of the Retail Industry. International Review of Entrepreneurship , 14 (2). 

Chan, K. W., & Mauborgne, R. (2005). Blue Ocean Strategy: From Theory to Practice. 

California Management Review , 47 (3), 105-121. 

ITAB. (2017). Annual report 2017 . Retrieved from https://itabgroup.com/globalassets/finansiell-information/2017/itab_annual_report_2017_en_web_ok.pdf?download=1 

ITAB. (2018). ITAB at Euroshop 2017 . Retrieved from https://itab.com/en/euroshop/ 

Johnson, M. W., Christensen, C. M., & Kagermann, H. (2018, December). Reinventing Your Business Model. Harvard Business Review . Retrieved from https://hbr.org/2008/12/reinventing-your-business-model 

Laszlo, C., & Zhexembayeva, N. (2017). Embedded Sustainability. In Embedded Sustainability 

(pp. 116-140). Routledge. 

Liu, S., Moizer, J., Megicks, P., Kasturiratne, D., & Jayawickrama, U. (2014). A Knowledge 

Chain Management Framework to Support Integrated Decisions in Global Supply Chains. Production Planning & Control , 25 (8), 639-649. 

Yip, G. S., & Hult, G. T. (2003). International Strategy. In Total global strategy . Boston: Prentice Hall. 

Appendices 

Introduction 

ITAB is a Swedish based company that deals in shop concepts for the European markets. The company made net sale amounting to 6,381,000,000 Swedish Krona (ITAB, 2017). That was an increase from the fiscal year 2016. The company recorded an 18% growth in 2017 compared to the 4% growth that was experienced in the company back in the financial year 2016 (ITAB, 2017). ITAB earned SEK 500 million in the fiscal year 2017 compared to the 371 million that was made in operating profits for the previous year (ITAB, 2017). The return on equity or ITAB was recorded to be 20.5% in the fiscal year 2017(ITAB, 2017). That increment from the 16.5% was recorded in the company's financial statements as 16.5%. From a general outlook, the financial health of ITAB had improved in the fiscal year 2017 compared to the year 2016 (ITAB, 2017). The expansion of the company regarding the opening of more stores and hiring more employees in 2017 was intrinsic to the rise in the financial prowess of the organization (ITAB, 2017). 

ITAB is involved in the production of different items for the Swedish and the worldwide market (ITAB, 2018). The company is involved in the designing and the manufacture of entrances and exits to the buildings. The company also deals in the shop fittings and shelves for the various stores that are spread across Sweden and the rest of the continental Europe (ITAB, 2018). The company is involved in the production of lighting equipment, which can be made into a variety of uses such as residential homesteads, as well as commercial building lighting systems. ITAB is involved in the design and the manufacture of the checkout and the self-checkout equipment that target the companies that want to automate customer service such as in the case of a supermarket having the self-checkout system where the customers can pick what they want, pay for it and leave without having to queue (ITAB, 2018). The other products that the company offers are the digital solutions and the pharmaceutical products and services for the market. 

The Swedish based ITAB has maintained sustainability and impressive economic performance that has seen the company's employees and customer bases grow exponentially, as revealed by the financial statements that the company has been releasing. The employees of the company were recorded to be close to three thousand and four hundred in 2017(ITAB, 2018). The company has also used its opportunity to expand into the other countries in and out of Europe in its efforts to target the global market. The leadership of the company has also been relevant to the success of the company in the expansion efforts that the company has implemented repeatedly. ITAB has also opened up production facilities in the other countries, which have a higher market concentration for its products and services than the others on average (ITAB, 2018). Thus, the corporate history of the company has been one that has provided internal and external possibilities for the company to grow (ITAB, 2018). 

The board of directors (BOD) heads the operations at ITAB. The BOD oversees the entire company's activities and ensures that they are running smoothly to spark financial development and corporate expansion (ITAB, 2018). The BOD is above the chief executive officer of the company who heads the overall company and ensures that the operations in the company have a smooth flow for developmental reasons and financial gain. The CEO is also directly above the regional managers who head the various regions that ITAB has established its presence into across the world. The regional managers also oversee the maximization of the productivity in the different branches of ITAB across the globe. The regional managers are above the branch managers who have operations managers below them in the hierarchy. The employees are below the department heads in the ownership structure at ITAB (ITAB, 2018). The employees are responsible for the face-to-face interaction with the customers of the company and the addressing of their individual needs and concerns (ITAB, 2018). 

Summary 

The knowledge and management framework, also known as the K&M framework, has various benefits to the organization that applies it in the execution of the multiple business activities and operations (Liu, Moizer, Megicks, Kasturiratne, & Jayawickrama, 2014). The K&M framework leads to the creation of better products and services in a company. The creation of the better products and services comes from the systematism in the approach that is used in the collection of the expertise that runs in business among the leaders and the workers to come up with the maximization of value in such an organization (Liu et al., 2014). The K&M framework contributes to better and quicker decision making in a company. Contemporary businesses have required the skill of decision making in various capacities owing to the increase in the level of competition from similar business venture and the rise in the level and use of technology. Therefore, the management of a company needs to ensure that the decisions that are made are binding and well thought of to enhance growth and expansion (Liu et al., 2014). The K&M framework is instrumental in such a process. The other logic of the K&M structure in a company is an improvement in the speed of the operations of the firm. The better and faster decision-making process leads to the overall increase in the speed of the handling of the various services at a company (Liu et al., 2014). The K&M framework supports the growth and development of the employee base of a company. Due to the maximization of the expertise value in a company under the K&M framework, the employees tend to have an increase in the agility and willingness to work for the company. The increase in the motivation among the workers, in turn, leads to the growth of their skills and value, and the consequent development of the existing staff base.